Forex Major Currencies Outlook (Nov 19 – Nov 23)

USD

CPI data for the month of October came in at 2.5% y/y as expected with the prior reading showing 2.3% y/y.

CPI ex-food and energy came in a bit weaker at 2.1% y/y vs 2.2% y/y as expected. On the monthly level, CPI came in at 0.3% m/m as expected with the prior reading showing 0.1% CPI ex- food and energy came in at 0.2% m/m as expected. Figures came in as expected with a steady rise from the previous reading. Supportive data for the greenback.

FED Chairman Powell continued to boost the greenback with his comments. He reiterated that the US economy remains strong and that the FED will continue to hike rates. The central bank’s goal is to extend the recovery, expand the economy and to keep inflation and unemployment low. He identified three general risks: slowing growth from abroad, fading fiscal simulus and lagged effect of past rate hikes on the economy.This week we will get housing data from the US as well as data on Durable Goods Orders, which will be the first input for Q4 GDP and Markit PMIs. Thanksgiving is on Thursday so liquidity in the markets will be lower.

Important events for USD:

Tuesday:

Housing Starts

Building Permits

Wednesday:

Durable Goods Orders m/m

Core Durable Goods Orders m/m

Durable Goods Orders excl. Defense m/m

Existing Home Sales Existing Home Sales m/m

Michigan Consumer Sentiment

Michigan Consumer Expectations

Friday:

Markit Manufacturing PMI

Markit Services PMI

Markit Composite PMI

EUR

Early on Monday morning during the London Session EURUSD has fallen bellow 1.13 mark for the first time since June 2017. 1.13 is an important technical level and the break of it was caused by uncertainty regarding the Italy’s budget. However, the break came during very thin liquidity in the markets as banks in the US were closed due to Veteran’s Day. The EU will publish an opinion on Italy’s revised budget on November 21 thus prolonging the uncertainty. ECB's Draghi said that high debt countries shouldn't increase debt further and that all countries should respect the rules of the European Union thus sending strong message to Italy.

Germany ZEW survey of current situation came in at 58.2 vs 65.0 as expected a big drop in the current condition sentiment. ZEW data says that industrial production, retail sales and foreign trade all point toward a weak development of the German economy in Q3. They also mention that survey participants do not see any improvement of that in the coming six months. A bleak picture for the EUR and Eurozone.

Preliminary GDP data for Germany in Q3, leading economy in the EU, came in at -0.2% q/q vs -0.1% q/q as expected. The German economy is going into contraction for one quarter is a case for concern for EUR. German economic minister Halt said that problems in the German economy are only temporary and attributed GDP results to the car industry’s emission problem. Bundesbank came in with their views on future risks and assessed them as skewed to the downside. Second reading of the EU Q3 GDP came in at 0.2% m/m as expected. Final CPI for the month of October came in at 0.2% m/m as expected, 2.2% y/y as expected with Core CPI coming in at 1.1% as expected. All figures came in as expected and in line with preliminary readings.

This week we will see a decisions of European Commission regarding Italian Budget. We will also have an overview of financial markets and economic developments in the form of ECB Monetary Policy Meeting Accounts, and on Friday we get second reading from Germany regarding Q3 GDP as well as Markit PMIs.

Important events for EUR:

Monday:

Eurogroup meeting

Current Account

Wednesday:

European Commission decision on Italy

Thursday:

ECB Monetary Policy Meeting Accounts

Thursday:

ECB Monetary Policy Meeting Accounts

Friday:

GDP q/q (Germany)

GDP y/y (Germany)

Markit Manufacturing PMI

Markit Services PMI

Markit Composite PMI

GBP

Talks about Brexit within the UK Government are getting out of hand. Supporters of a hard Brexit reject any compromise that PM May could offer. Pro-Remain politicians start to voice their opinions especially after UK Transport Minister and pro-Remain politician Jo Johnson resigned last Friday. BOE Board member Broadbent stated that Brexit deal is still the most likely outcome and that fair amount of uncertainty would disappear with a Brexit deal. A new Brexit Summit will be held in Brussels on November 25 and 26. On Thursday UK Brexit Secretary Dominic Raab resigned stating that he cannot support indefinite backstop arrangement as the main reason. This has sent pound sinking almost 300 pips in the first couple of hours after the announcement. Due to the resignation markets have now priced out a rate hike by BOE.

Average Earnings came in at 3.0% as expected vs 2.7% prior. This is a strongest reading since Q3 2015. Average Earnings excluding Bonus came in at 3.2% vs 3.1% as expected. This is the strongest rise since Q4 2008. Unemployment ticked up to 4.1% vs 4.0% as expected and employment change was a bit softer than expected, but overall this is a very good report from the UK showing strength of UK economy.

CPI for month of October came in at 0.1% m/m vs 0.2% m/m as expected. Core CPI came in at 1.9% y/y as expected a slight tick down on the monthly level but the core CPI remains steady at 1.9% which is a good sign.

AUD

Wage price index data for Q3 came in at 0.6% q/q as expected and 2.3% y/y as expected with the prior reading showing 2.1%. This is the best y/y reading in the last 3 years. Wage growth is slowly picking up, RBA would like it to be faster to increase spending and thus economic growth.

Labour market continued strong with data concerning Employment Change coming in at 32.8k vs 20k as expected. Unemployment rate came in at 5.0% while it was expected for it to tick up to 5.1%. Full Time Employment Change came in at 42.3k which is a very healthy number. Participation rate also rose to 65.6%. Another stark labour report coming in from Australia showing that RBA is fulfilling one half of its mandate.

This week we will have RBA Meeting Minutes from previous meeting and markets will be on the look for any change in the language by RBA. Later on, there will be a speech by Governor Lowe so we can gain more insight on how RBA evaluates new employment and wage data and how it will influence their policies for the future.

Important events for AUD:

Tuesday:

RBA Meeting Minutes

RBA Governor Lowe Speach

NZD

Business NZ Manufacturing PMI for the month of October came in at 53.5 vs 51.7 prior month. Reading shows improvement in sentiment among manufacturers with rise in 4 out of 5 sub-indexes. NZD is still nicely positioned and underpinned with strong employment data from the previous week. GDP figures are the main concern now since Governor Orr said that he would consider a rate cut in the event GDP falls below expectations, therefore other data may have subdued effect on NZD.

This week we will have GDT auction and data regarding consumption.

Important events for NZD:

Tuesday:

GDT Price Index

Sunday:

Retail Sales q/q

Core Retail Sales q/q

Retail Sales y/y

CAD

Saudi Arabia decided to cut the production of oil by 500k bpd from December which stopped oil’s month-long free fall. During the OPEC’s meeting that was held over the weekend it was reckoned that oil supply in 2019 could be cut by 1.4m bpd. December 6th meeting in Vienna will be crucial for oil and CAD as well.

This week we will have speeches by Deputy Governors Wlilkins and Lane, CAD has been hit hard last week with falling oil prices and issues with USMCA agreement. Inflation and consumption data will be published on Friday.

Important events for CAD:

Tuesday:

BoC Senior Deputy Governor Wilkins Speech

BoC Deputy Governor Lane Speech

Wednesday

Wholesale Trade m/m

Friday:

CPI m/m

CPI y/y

Core CPI m/m

Core CPI y/y Retail Sales m/m

Core Retail Sales m/m

JPY

Preliminary GDP data for Q3 in Japan came in at -0.3% q/q as expected. GDP business spending y/y for Q3 came in at -0.2% q./q vs 0.2% q/q as expected. Data doesn’t paint a bright picture for the economy of Japan. Economy minister Motegi attributed bad data to natural disasters (devastating floods and earthquakes) and falling exports and stated that Japan’s is recovering moderately.

This week we will have data on Trade Balance from Japan as well as inflation on national level. Monetary Policy Statement will be published on Tuesday with more guidance on BOJ’s thinking.

Important events for JPY:

Monday:

Trade Balance

Imports y/y

Exports y/y

Tuesday:

BOJ Monetary Policy Statement

Thursday:

CPI y/y

Core CPI y/y

CPI excl. Food and Energy

CHF

PPI data came in at 0.2% m/m vs 0.1 m/m as expected with prior reading showing -0.2% and 2.3% y/y vs 2.2% as expected and prior reading of 2.6%. Slightly better data on monthly data and yearly data is lagging behind prior indicating that inflationary pressures are beginning to run into obstacles. SNB remains confident with current monetary policy and will continue normalisation only after ECB. So far, they seem satisfied with EURCHF ranging from 1.12 to 1.14.

This week we will have data on Trade Balance from Switzerland as well as industrial production.

Important events for CHF:

Tuesday:

Trade Balance Imports y/y Exports y/y

Thursday:

Industrial Production y/y

You can follow all economic events on the Economic Calendar page on our Website. MT4 server time is set to GMT + 2 and if you need assistance converting MT4 server time to your local time you can use some of the online time converters such as WorldTimeBuddy.

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